SEC News Digest

Issue 2012-36 February 23, 2012

COMMISSION ANNOUNCEMENTS

SEC Suspends Trading in Securities of PGI Energy, Inc.

The Securities and Exchange Commission (Commission) announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the Exchange Act), of trading in the securities of PGI Energy, Inc. f/k/a Tensas, Inc. (PGI Energy), of Houston, Texas at 9:30 a.m. EST, on February 23, 2012 through 11:59 p.m. EST, on March 7, 2012.

The Commission temporarily suspended trading in the securities of PGI Energy because of questions regarding the accuracy and adequacy of representations by PGI Energy in press releases and other public statements concerning the company’s business activities and contracts, and the nature and timing of a dividend the company announced to shareholders. PGI Energy is quoted on OTC Link operated by OTC Markets Group, Inc. under the ticker symbol “PGIE.”

The Commission cautions brokers, dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the company.

Further, brokers and dealers should be alert to the fact that, pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspension, no quotation may be entered unless and until they have strictly complied with all of the provisions of the rule. If any broker or dealer has any questions as to whether or not he has complied with the rule, he should not enter any quotation but immediately contact the staff in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 551-5777. If any broker or dealer is uncertain as to what is required by Rule 15c2-11, he should refrain from entering quotations relating to PGI Energy’s securities until such time as he has familiarized himself with the rule and is certain that all of its provisions have been met. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action.

If any brokers, dealers or other person has any information which may relate to this matter, please call the Fort Worth Regional Office of the Securities and Exchange Commission at (817) 978-3821 or e-mail dfw@sec.gov. (Rel. 34-66444)

Securities and Exchange Commission Suspends Trading in the Securities of Ten Issuers For Failure to Make Required Periodic Filings

The U.S. Securities and Exchange Commission announced the temporary suspension of trading in the securities of the following issuers, commencing at 9:30 a.m. EST on February 23, 2012 and terminating at 11:59 p.m. EST on March 7, 2012.

The Commission temporarily suspended trading in the securities of these ten issuers due to a lack of current and accurate information about the companies because they have not filed periodic reports with the Commission in over two years. This order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act).

The Commission cautions brokers, dealers, shareholders and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by these companies.

Brokers and dealers should be alert to the fact that, pursuant to Exchange Act Rule 15c2-11, at the termination of the trading suspensions, no quotation may be entered relating to the securities of the subject companies unless and until the broker or dealer has strictly complied with all of the provisions of the rule. If any broker or dealer is uncertain as to what is required by the rule, it should refrain from entering quotations relating to the securities of these companies that have been subject to a trading suspension until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. Any broker or dealer with questions regarding the rule should contact the staff of the Securities and Exchange Commission in Washington, DC at (202) 551-5720. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action.

If any broker, dealer or other person has any information which may relate to this matter, they should immediately communicate it to the Delinquent Filings Group of the Division of Enforcement at (202) 551-5466, or by e-mail at DelinquentFilings@sec.gov. (Rel. 34-66445)

ENFORCEMENT PROCEEDINGS

Delinquent Filer’s Stock Registration Revoked

The registration of the registered securities of China-Biotics, Inc., has been revoked. It had repeatedly failed to file required annual and quarterly reports with the Securities and Exchange Commission. Thus, it violated a crucial provision of the federal securities laws that requires public corporations to publicly disclose current, accurate financial information so that investors may make informed decisions. The revocation was ordered in an administrative proceeding before an administrative law judge. (Initial Decision No. 454; File No. 3-14581)

SEC Suspends Attorney in the Matter of Robert S. Brown, Esq.

The U.S. Securities and Exchange Commission announced today that it has suspended Robert Steven Brown from appearing or practicing before it as an attorney. This action follows Brown’s disbarment from the practice of law in New York as a result of his conviction for felony obstruction of justice in connection with a fraudulent “pump and dump” scheme.

In November 2009, Brown pled guilty to a single count of obstruction of justice. In concert with his guilty plea, Brown admitted to participating in and facilitating a fraudulent “pump and dump” scheme involving a Tokyo-listed Chinese corporation, a California-based investment firm, and several shell companies organized by Brown. Following Brown’s conviction, the New York Departmental Disciplinary Committee petitioned the New York Supreme Court, Appellate Division to remove Brown from the roll of attorneys as a result of his automatic disbarment upon conviction of a felony under New York Judiciary Law § 90(4). Brown consented to the Disciplinary Committee’s petition, which was granted on June 14, 2011 and made retroactive to the date of Brown’s November 3, 2009 guilty plea and conviction.

On February 22, 2012, the Commission issued an Order of Forthwith Suspension Pursuant to Rule 102(e)(2) of the Commission’s Rules of Practice that suspends Robert S. Brown from appearing or practicing before the Commission. The Commission’s Order was based on Brown’s felony conviction, and disbarment from practicing law in New York. (Rel. 34-66443; File No. 3-14766)

Commission Orders Hearings on Registration Suspension or Revocation Against Ten Companies for Failure to Make Required Periodic Filings

In conjunction with these trading suspensions, the Commission today also instituted two public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registration of each class of the securities of ten companies for failure to make required periodic filings with the Commission:

In these Orders, the Division of Enforcement (Division) alleges that the respective Respondents are delinquent in their required periodic filings with the Commission.

In these proceedings, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the Respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder, are true. The judge in the proceedings will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of these Respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in the proceedings issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (In the Matter of Jetronic Industries, Inc. (n/k/a New Bastion Development, Inc.), Lions Petroleum, Inc. (n/k/a China Hongxing Agritech, Inc.), MDI, Inc., and MobilePro Corp. - Rel. 34-66446; File No. 3-14767); (In the Matter of JMAR Technologies, Inc., Kolorfusion International, Inc., Legalopinion.com (n/k/a Drayton Richdale Corp.), Lifestream Technologies, Inc., Luna Technologies International, Inc., and Litewave Corp. – Rel. 34-66447; File No. 3-14768)

In the Matter of Ramco Energy, et al.

An Administrative Law Judge has issued an Order Making Findings and Revoking Registration by Default as to Ramco Energy PLC (n/k/a SeaEnergy PLC) (Default Order) in Ramco Energy PLC (n/k/a SeaEnergy PLC), Admin. Proc. No. 3-14661. The Order Instituting Proceedings alleged that Respondent Ramco Energy PLC (n/k/a SeaEnergy PLC) (Ramco) failed to file any periodic reports since filing a Form 20-F for the period ended December 31, 1999. The Default Order finds these allegations to be true and revokes the registration of each class of registered securities of Ramco pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-66448; File No. 3-14661)

On December 23, 2011, the Securities and Exchange Commission filed a motion in SEC v. The BISYS Group, Inc. 07 Civ. 4010 (RJS) (S.D.N.Y.), a financial reporting case, seeking court approval of a plan to distribute the approximately $25 million available for distribution to investors harmed by the conduct alleged in that case (the Distribution Plan or Plan). In connection with that motion, on February 8, 2012, the Hon. Richard J. Sullivan issued an order appointing A.B. Data, Ltd., the claims administration firm that served as the court-appointed claims administrator in a parallel class action, In re BISYS Securities Litigation, 04-Civ-3840 (JSR) (S.D.N.Y.) (the Class Action), as the claims administrator in the Commission’s case. The Court’s order also directed the posting of notice of the proposed Plan the Commission’s website and A.B. Data’s website and set a deadline of March 12, 2012 for the submission of any comments or objections.

If approved by the Court, the Distribution Plan will govern the distribution of the approximately $25 million paid by BISYS in settlement of the case, plus additional funds that may added from the approximately $225,000 paid in settlement by the defendant in a related case, SEC v. Wevodau, 08-Civ-8343 (RJS) (S.D.N.Y.). Under the terms of the Distribution Plan, the available funds will be distributed to shareholders who acquired and held BISYS stock during the period beginning on October 23, 2000 and ending on April 22, 2004) (the Recovery Period), and suffered a loss on their investment, as calculated under the Plan. The Plan will be administered by A.B. Data, the claims administration firm that served as the court-appointed claims administrator in the Class Action. Persons eligible to receive a distribution under the proposed Plan are persons who acquired BISYS shares during the Recovery Period, and who incurred a Net Recognized Loss, as defined under the Plan, with respect to their purchase of BISYS shares and (a) submitted a claim that was not deemed deficient in the Class Action; or (b) who opted out of the class in the Class Action.

The Commission’s complaint, filed May 23, 2007, alleged that BISYS violated the financial reporting, books-and-records, and internal control provisions of the Securities Exchange Act of 1934 by engaging in a variety of improper accounting practices that resulted in material overstatements of BISYS’s reported financial results by roughly $180 million in fiscal years 2001, 2002, and 2003. As a result, the Commission alleged that BISYS filed annual and quarterly reports, and other documents, that materially misstated its results for the fiscal years ended June 30, 2001, 2002, and 2003, interim quarters during those fiscal years, and the quarters ended September 30, and December 31, 2003. On July 18, 2007, the Court entered a final judgment against BISYS, to which BISYS consented without admitting or denying the allegations in the complaint, pursuant to which BISYS paid a total of approximately $25 million in disgorgement and pre-judgment interest in settlement of the case.

Former Canopy Financial Co-Founders Sentenced to Prison

Co-founders of the bankrupt Canopy Financial, Inc., a health care transaction-software company based in Chicago, were sentenced to 15 and 13 years in prison for defrauding investors and clients of more than $93 million in United States v. Jeremy Blackburn and Anthony Banas, Criminal Action No. 09 CR 976 (N.D. Ill. March 1, 2010) on February 15, 2012. Anthony Banas, Canopy’s chief technology officer, was sentenced to 160 months in prison, while Jeremy Blackburn, Canopy’s former president and chief operating officer, was sentenced to 180 months in prison. Both men pleaded guilty in late 2010 to one count of wire fraud, admitting they engaged in a fraud scheme that cheated investors of approximately $75 million and also misappropriated more than $18 million from customer accounts intended for health care savings and expenses. In imposing sentence, United States District Judge Ruben Castillo of the Northern District of Illinois noted that this case was the most aggravated financial fraud he had seen in his 18 years on the federal bench. The judge ordered both men to pay mandatory restitution and forfeiture totaling $93,125,918.

According to their plea agreements, Blackburn and Banas used false information about Canopy’s financial condition, including a bogus auditor’s report and falsified bank statements, to fraudulently obtain approximately $75 million from several private equity investors in 2009. Approximately $39 million of that money was used to redeem shares of other Canopy investors, including approximately $1.6 million that went to Blackburn and $975,000 that went to Banas, while another $29 million obtained from investors was deposited into Canopy operating accounts.

Also according to their plea agreements, Blackburn and Banas misappropriated Canopy operating funds for their own benefit. Blackburn took approximately $6 million in unauthorized withdrawals and transfers from Canopy bank accounts during 2009. Blackburn typically directed a Canopy employee, or occasionally Banas, to transfer Canopy funds to his bank accounts or to pay for his personal expenses, including credit card balances, luxury car purchases, and travel on a private jet. Blackburn also paid for personal home renovations, bought sports tickets and purchased jewelry and watches using misappropriated Canopy funds. Banas used misappropriated Canopy money to invest $300,000 in a nightclub. Banas also spent $400,000 between 2007 and 2009 on other personal expenses.

Blackburn admitted that he created phony bank statements during 2009 to conceal the transfer of more than $18 million from special health care accounts in which Canopy held funds as custodian for the benefit of more than 1,600 clients and customers to make payments to medical providers. The funds were transferred to Canopy’s own operating accounts, as well as to benefit Blackburn and Banas personally.

The Commission’s cases against Blackburn (SEC v. Canopy Financial, Inc., et al., Case No. 09-CV-7429, USDC, N.D.IL (LR-21324) and Banas (SEC v. Anthony T. Banas, Case No. 10- CV 3877 USDC N.D. IL) (LR-21566) resulted in permanent injunctions against both individuals for violating the antifraud provisions of the Securities Act of 1933 [Section 17(a)] and the Securities Exchange Act of 1934 [Section 10(b) and Rule 10b-5 thereunder], and ordered disgorgement of $1,779,759.83 and prejudgment interest of $71,182.03 against Blackburn in April 2011, and disgorgement of $975,548.25 and prejudgment interest of $32,910.45 against Banas in June 2010.

The Commission acknowledges the assistance of the U.S. Attorney’s Office of the Northern District of Illinois and the Chicago Regional Office of the U.S. Department of Labor in this matter. [U.S. v. Jeremy Blackburn and Anthony Banas, Criminal Action No. 09 CR 976 (N.D. Ill.)] (LR-22266)

The Commission announced that on February 2, 2012, United States District Judge William C. Caldwell of the United States District Court for the Middle District of Pennsylvania entered an order imposing a $2,500,000 civil penalty jointly and severally against defendants Robert Glenn Bard and Vision Specialist Group, LLC. In an earlier order on November 10, 2011, the Court found that defendants made false statements to thirty-three of their investment advisory clients on 146 separate occasions about what type of securities and holdings they had, where the assets were, and the value of the assets, and that they charged at least one client excessive fees. In assessing the penalty, the Court found that the egregiousness of defendants’ behavior, the recurrent nature of the conduct, the lack of cooperation with authorities, defendants’ degree of scienter, and the risk of loss created by defendants’ actions all weighed in favor of imposing a substantial penalty.

This case arises out of allegations by the Commission in a complaint filed on July 30, 2009, that defendant Bard, an investment adviser, and his solely-owned company Vision Specialist Group, LLC, had violated the federal securities laws through fraudulent misrepresentations regarding client investments, account performance and advisory fees, the creation of false client account statements, and forgery of client documents. On November 10, 2011, the Court granted the Commission’s motion for summary judgment. The Court found Bard and Vision Specialist liable for violations of § 17(a) of the Securities Act of 1933, § 10(b) of the Exchange Act of 1934, and Rule 10b-5 thereunder, and §§ 206(1) and 206(2) of the Investment Advisers Act of 1940. In that order, the Court also entered permanent injunctions against the defendants for violations of those provisions, and held the defendants jointly and severally liable for disgorgement of $450,000, plus prejudgment interest in an amount to be determined. [SEC v. Robert Glenn Bard, et al., Civil Action No. 1:09-cv-1473 (M.D. Pa.)] (LR-22267)

INVESTMENT COMPANY ACT RELEASES

Continental Assurance Company Separate Account B

An order has been issued on an application filed by Continental Assurance Company Separate Account B pursuant to Section 8(f) of the Investment Company Act of 1940 declaring that it has ceased to be an investment company. (Rel. IC-29950 – February 22)

Preservation Trust Advisors, LLC and Northern Lights Fund Trust

An order has been issued on an application filed by Preservation Trust Advisors, LLC and Northern Lights Fund Trust for an exemption from Section 15(a) of the Investment Company Act of 1940 (Act) and Rule 18f-2 under the Act. The order permits the applicants to enter into and materially amend subadvisory agreements without shareholder approval. (Rel. IC-29951 – February 22)

GE Asset Management Incorporated, et al.

The Commission has issued a permanent order to GE Asset Management Incorporated, et al. under Section 9(c) of the Investment Company Act of 1940 (Act) with respect to an injunction issued against GE Funding Capital Market Services, Inc. (GE Funding CMS) by the U.S. District Court for the District of New Jersey on January 23, 2012. The permanent order exempts GE Asset Management Incorporated, GE Investment Distributors, Inc. and GE Funding CMS as well as companies of which GE Funding CMS is or becomes an affiliated person, from the provisions of Section 9(a) of the Act. (Rel. IC-29952 – February 22)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by The NASDAQ Stock Market LLC to modify NASDAQ connectivity options and fees (SR-NASDAQ-2012-028) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of February 27. (Rel. 34-66428)

A proposed rule change filed by NASDAQ OMX PHLX LLC to modify connectivity options and fees (SR-Phlx-2012-20) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of February 27. (Rel. 34-66429)

A proposed rule change filed by The NASDAQ Stock Market LLC relating to listing of strike prices (SR-NASDAQ-2012-026) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of February 27. (Rel. 34-66431)

Proposed Rule Changes

The Financial Industry Regulatory Authority, Inc. has filed a proposed rule change (SR-FINRA-2012-011) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to amend FINRA Rule 14107 to provide the Director of Mediation with discretion to determine whether parties to a FINRA mediation may select a mediator who is not on FINRA’s mediator roster. Publication is expected in the Federal Register during the week of February 27. (Rel. 34-66441)

The Financial Industry Regulatory Authority, Inc. has filed a proposed rule change (SR-FINRA-2012-012) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to amend FINRA Rules 12401, 12800, 13401, and 13800 to raise the limit for simplified arbitration from $25,000 to $50,000. Publication is expected in the Federal Register during the week of February 27. (Rel. 34-66442)

SECURITIES ACT REGISTRATIONS

The following registration statements have been filed with the SEC under the Securities Act of 1933. The reported information appears as follows: Form, Name, Address and Phone Number (if available) of the issuer of the security; Title and the number and/or face amount of the securities being offered; Name of the managing underwriter or depositor (if applicable); File number and date filed; Assigned Branch; and a designation if the statement is a New Issue.

Amendments to the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics

5.06

Change in Shell Company Status

6.01

ABS Informational and Computational Material.

6.02

Change of Servicer or Trustee.

6.03

Change in Credit Enhancement or Other External Support.

6.04

Failure to Make a Required Distribution.

6.05

Securities Act Updating Disclosure.

7.01

Regulation FD Disclosure

8.01

Other Events

9.01

Financial Statements and Exhibits

8-K reports may be viewed in person in the Commission's Public Reference Branch at 100 F Street, N.E., Washington, D.C. To obtain paper copies, please refer to information on the Commission's Web site at http://www.sec.gov/answers/publicdocs.htm. In most cases, you can view and download this information by using the search function located at http://www.sec.gov/edgar/searchedgar/companysearch.html.